“A much better option would be what the Aussies do. Your ‘car tax’ also includes 3rd party cover.”
I don’t see how that is a better system. You can’t purchase Vehicle Excise Duty (tax disk) in the UK without proving you currently have Insurance in place for somebody to drive the vehicle. In the UK system the cost of insurance is paid by those with the highest actuarial risk, presumably in Oz everyone pays the same – so “safe, responsible” drivers are subsidising the reckless? Uninsured vehicles just become untaxed vehicles in an Oz based system. There could be an argument for aligning expiry dates of Insurance, VED and MoTs but it does mean you are loading all the cost at one time which will disadvantage the poorest.
A simpler solution is just to put the 3rd party insurance and VED onto fuel tax. Cars work perfectly well without insurance and tax, but they don’t work so well without fuel.
Massively simplifies the nonsense of VED depending on engine size: it would now depend on how much fuel you use, which is a much better indicator of how much pollution you generate.
Also means you can get rid of a large part of the DVLA. The savings there, plus the fact that tax payers no longer have to subsidise non tax payers (through the uninsured drivers scheme) would probably cancel any savings that would be lost by safe drivers through loss of risk-based 3rd party premiums.
Of course, it’ll never happen. Increasing fuel duty is completely unacceptable politically, even if it meant savings overall for the vast majority of law abiding drivers.
